Wednesday 1 February 2017

Theories of Surplus Value, Part I, Chapter 3 - Part 21

The flaw that Smith believes has arisen is that The Law of Value cannot be operating, if this condition exists, whereby a quantity of labour, embodied in commodities, buys a greater quantity of living labour.

“His merit is that he emphasises—and it obviously perplexes him—that with the accumulation of capital and the appearance of property in land—that is, when the conditions of labour assume an independent existence over against labour itself—something new occurs, apparently (and actually, in the result) the law of value changes into its opposite. It is his theoretical strength that he feels and stresses this contradiction, just as it is his theoretical weakness that the contradiction shakes his confidence in the general law, even for simple commodity exchange; that he does not perceive how this contradiction arises, through labour-power itself becoming a commodity, and that in the case of this specific commodity its use-value—which therefore has nothing to do with its exchange-value—is precisely the energy which creates exchange-value.” (p 87-8)

Smith is confused by what appears to be a break down of The Law of Value, because a quantity of labour-time, in the form of commodities, buys a greater quantity of labour-time, in the form of living labour, and this causes him to question The Law of Value, in general, in respect of conditions where the labourers are no longer the owners of land and means of production. In fact, it is not a breakdown of The Law of Value at all, but merely a reflection of the fact that The Law of Value assumes a different form under different modes of production, and the specific form under capitalism reflects the fact that labour-power itself becomes a commodity. 

Ricardo was not confused by this, and continues to recognise the basis of the exchange of commodities is an exchange of equal values. But, unlike Smith, Ricardo does not recognise that anything has changed. After all, for Ricardo, capitalist production is more established fact than it is for Smith. Ricardo simply accepts the existence of surplus value, and analyses it, not as a general category, which requires a questioning of its source, but only in terms of its specific manifestation as profit, interest and rent.

“But he is behind Adam Smith in that he does not even suspect that this presents a problem, and therefore the specific development which the law of value undergoes with the formation of capital does not for a moment puzzle him or even attract his attention.” (p 88)

Because Smith does not make the distinction between labour and labour-power, he is led to a position where he believes that surplus value can only be the result of paying labour below its value, or what amounts to the same thing, that all sellers of commodities, other than labour-power, sell their commodities above their value, so that these commodities command a greater quantity of labour-time than they contain themselves. 

Marx quotes Thomas Hodgskin, who echoes this view.

““Natural or necessary price means […] the whole quantity of labour nature requires from man, that he may produce any commodity… Labour was the original, is now and ever will be the only purchase money in dealing with nature… .Whatever quantity of labour may be requisite to produce any commodity, the labourer must always, in the present state of society, give a great deal more labour to acquire and possess it than is requisite to buy it from nature. Natural price thus increased to the labourer is social price … we must always attend to the difference between natural and social price” (Thomas Hodgskin, Popular Political Economy, etc., London, 1827, pp. 219–20). 

In this presentation Hodgskin reproduces both what is correct and what is confused and confusing in Adam Smith’s view.” (p 88)

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